Lawmakers Propose Higher Gas Taxes and Registration Fees for Electric Cars

new jersey car tax

New Jersey lawmakers are ramping up efforts to address the state’s infrastructure needs, create jobs, and fuel economic growth. A new bill, sponsored by Sen. Paul Sarlo and Assemblyman Clinton Calabrese, aims to raise the state’s gas tax collections by approximately 18% over the next five years. Additionally, the bill proposes the implementation of a new tax on electric vehicle (EV) registrations. The revenue generated from these measures will be used to fund much-needed road and bridge work in the state.

Addressing Infrastructure Needs

Sen. Sarlo, the Senate budget chair, emphasized the significance of the proposed changes. He stated that the added revenue is crucial for addressing New Jersey’s infrastructure needs and supporting the state’s economy. The funds will be allocated towards repairing, maintaining, and improving roads, bridges, tunnels, and railways.

The Current Status of Gas Taxes

Prior to 2016, New Jersey had one of the lowest gas taxes in the country. However, in 2016, lawmakers approved a deal that more than doubled the levies on gasoline and diesel, reducing the state’s sales tax and eliminating its estate tax. As a result, New Jersey’s gas tax is now one of the highest in the nation, with a rate of 42.3 cents per gallon for gasoline and 49.3 cents per gallon for diesel. These taxes automatically adjust to hit revenue targets, increasing if there’s a shortfall and decreasing if there’s a surplus.

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Proposed Changes and Bonding Authority

The new bill not only aims to increase gas tax collections and implement a new EV registration tax but also seeks to increase the transportation trust fund’s bonding authority. This increase would allow the trust fund to borrow an additional $3.6 billion through June 2029. The bill also proposes delaying the expiration of existing bonding authority, which would otherwise sunset on July 1. At present, the transportation trust fund has approximately $5.2 billion in unused bond capacity.

Increased Spending Limit and Project Allocation

Under the proposed bill, the transportation trust fund would be able to spend $2 billion on transportation projects annually, up from $1.6 billion under current law. The bill also includes provisions to gradually increase the spending limit by about $60 million at the start of fiscal years 2027, 2028, and 2029. Additionally, the bill specifies that the additional $185 million in spending should be equally distributed between local, county, NJ Transit, and Department of Transportation projects.

Addressing Electric Vehicle Contributions

The bill also aims to address how electric vehicles will contribute to maintaining New Jersey’s roadways as the state moves toward phasing out new gas-burning cars by 2035. Currently, electric vehicle owners do not directly contribute to the transportation trust fund through gas taxes. However, their contribution to road wear has gained increasing attention, especially as electric vehicles become more common on New Jersey’s roads.

Introducing a Flat Annual Fee

To address the issue of road wear and contribute to the trust fund, the bill proposes a flat $250 annual fee on zero-emission vehicle registration renewals. This fee would increase by $10 each July until 2028, reaching $290. The fee would come into effect on July 1. Supporters of the fee argue that it is necessary to ensure that those who use the roads help pay for their maintenance and improvement. However, some transportation advocates express concerns that the provision could hinder New Jersey’s emission reduction efforts.

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Potential Implications and Opposition

The proposed higher registration costs, combined with Governor Phil Murphy’s plan to phase out a sales tax exemption for electric vehicles, may face opposition from those who argue that increasing costs goes against the goal of incentivizing the adoption of electric vehicles. However, supporters argue that it is essential to align the tax burden with road usage as the state transitions away from gas-powered vehicles. In June 2023, there were 95,097 battery electric vehicles registered in the state, and a $250 fee on each of those registrations would generate approximately $24 million.

FAQs

Q: What is the purpose of the gas tax in New Jersey?
A: The gas tax is intended to place a higher burden on those who drive more to fund transportation infrastructure. As the state transitions away from gas-powered vehicles, it is important to maintain a model that ensures those who use the roads contribute to their maintenance and improvement.

Q: How will the proposed EV registration fee impact electric vehicle owners?
A: The bill proposes a flat $250 annual fee on zero-emission vehicle registration renewals, which will increase by $10 each July until 2028 when it reaches $290. This fee aims to ensure that electric vehicle owners contribute to the maintenance of New Jersey’s roadways.

Conclusion

New Jersey lawmakers are pushing for higher gas taxes and the introduction of a new tax on electric vehicle registrations to address the state’s infrastructure needs. The proposed measures aim to raise additional revenue, support road and bridge work, and promote economic growth. As the state moves towards phasing out gas-burning cars, this bill seeks to ensure that electric vehicle owners contribute their fair share to the maintenance of New Jersey’s roadways. With ongoing discussions and potential opposition, the future of these proposals remains to be seen.

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